Monday, December 6, 2010

Debt Slave

Fed chairman Ben Bernake finished his much ballyhooed 60 minutes yickity yackity session last night and confirmed what we already knew. He lies like a rug. You have to wonder why anyone at CBS or anywhere would be interested in anything the man who missed the housing bubble and missed the credit bubble had to say. We would have been far better served to hear from the likes of Peter Schiff who saw it as early as 2004. Instead they allowed Bernanke to prattle on in a vain attempt to make sense of policies that make none with the same old out dated arguments from the econo-junk science to which he pays homage.

Bernanke believes that deflation is the real threat and that the Fed should pump up money into the economy to prop up the recovery. A statement such as inflation is "very very low" is delusional, to believe the Fed could "prop up a recovery" is grandeur. Both are beyond reason, neither is worth debate.

Arguing over inflation vs deflation QEs 1-2 and what the Fed should be doing now are missing the point and that is the point, to take your eye off the ball. The Fed cannot solve the problem because it alone by design is the problem.

Bernanke and his Keynesian junk science colleagues want you to believe that spending is the economy's only remedy. But what they advocate is far worse than pure blind binge spending, it's borrowing, deficit borrowing, the kind gambling addicts and crack heads engage in and Bernanke will force feed you and your unknowing Uncle until you both gag. That debt once accepted can never be repaid and can only accumulated exponentially.

For simple proof consider what happens when Uncle Sam borrows $100 from the Fed at 1% interest. For the sake of illustration let's suppose that there is no money in the economy at time t = zero. Uncle Sam distributes the $100 in the most judicious way possible. Eventually he has to repay the Fed $101. But since the only money in existence is the $100 lent into it, there is no money to repay the one dollar interest. It doesn't exist. At this point Uncle Sam is a debt slave. Regardless of his ingenuity or success with the loan, he has to borrow again to repay the interest. Uncle Sam is reduced to using MasterCard to pay off a visa and rollover debt continuously in perpetuity. It is under this crushing weight of perpetual debt that the economy is collapsing. Nothing Bernanke can say or do can change that. He knows that.

What Bernanke is not saying it is that under this debt-based monetary system, no money exists until Uncle Sam goes into debt. The $100 popped into existence the instant Uncle Sam borrowed it at which time the Fed created an electronic accounting entry for it. It actually came from nothing. Now the money comes from nothing, but the debt is real, and very debilitating.

The dollar is actually a bill issued by the Fed and guaranteed by the taxpayer, the personal income tax to be more specific. That is how the Federal Reserve at 1913 was written. That act by the way is based on the old Bank of England model, a well-established debt slavery system which our forefathers fought to escape from.

“If the American people ever allow private banks to control the issuance of their currency, first by inflation, and then by deflation, the banks and the corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.”

That prophetic statement was written to John Tyler ( tenth president) by Thomas Jefferson (our third president).

This scam is made much worse by the fact that the Federal Reserve has no reserves. Why do you think they fight the audits so hard? The Fed has no gold or silver or assets.

Historically banks made loans against reserves of gold and silver. If you borrowed say an ounce of gold you got either a written receipt for it or a hunk of the flaky metal. Either way the bank had something of real value which it put at risk to lend. The borrower could in principal repay the interest buy digging it out of the ground, but if he defaulted the bank lost out on it's gold.

Imagine someone in those quaint old days upon receipt of their ounce of gold, going into the vault to find an empty shelf staring back at them. That happened and the bankers were hung not bailed out. You see the ancients spotted the fraud instantly. Why don't we?

Because we don't have a base of comparison nor do we even know where money comes from. It comes from nothing. The money borrowed does not legally exist until the loan document is signed by the borrower. If the borrower defaulted on the entire amount the bank never lost a cent. The bank only has an unrealized lost on the interest that would have been paid. Do you see the power of money from nothing, the Fed has an unlimited supply of money that the government allows it to conjure up out of thin air.

We assume the bank lends us something, gold, or silver, or yack dung from the Himalayas, something of value, but it does not, the value is created by the borrower. Similarly we assume that the Fed has something of value to lend to the government. Didn't you ever wonder how the Fed has so much money to throw around. But the Fed lends nothing of value because the it has nothing of value. Having nothing of value it takes everything. It taxes the labor of the people to repay a needless debt of money from thin air, all to fatten the pockets of the usurers.

The simple solution has been known for hundreds of years. Whether backed by gold and silver or fiat the government simply must always issue its own money instead of going debt to greedy moneylenders. Then Uncle Sam could circulate the money into the economy debt free for the good of all its citizens.

Instead betrayed in 1913 by their corrupt Representatives generations of uninformed Americans have lived and died sacrificing the fruits of their labors in between to the Federal Reserve under the strong arm of the IRS. It is actual slavery, for what can be different between the forced labor to the state or the forced forfeiture of the fruits of ones own?

And now these selfish men with this inherently unstable system have forced a willing America to the brink, and the endgame is near. Soon the Uncle Sam will be forced to do what Third World nations had to do with the IMF and World Bank. He will have to sell off all his land, infrastructure, and public works, all to repay what can never be repaid, the needless debt on money created from nothing.

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